【正文】 the European aid package, Wharton professors Mauro F. Guillen(born and educated in Spain) and Saikat Chaudhuri(born and educated in Germany), and Jean Salmona (born and educated in France), founder and chairman of the editorial board of ParisTech Review, participated in an interview on the likely outes from the financial crisis facing Greece, some of its sister countries and the European Moary Union more generally. How did events spin so out of control? How will the politics of the crisis affect the Eurozones economic performance? And will there be similar crises in the future? Guillen, Chaudhuri and Salmona addressed these and other questions as well as many longerterm issues relevant in the wake of bailout efforts on May 7, just before the huge financial support package was announced. Mauro Guillen: The background to all of this is, of course, a little bit more than 10 years ago when some European countries adopted the euro as their currency. But they didn39。s financial system. Such an oute would have set off a new round of recession in Europe and might have dragged the world financial system back to the depths reached 12 to 18 months ago or worse. Some critics still view the overall stabilization package, which left many details vague, as a shortterm fix that ultimately will fail to address deep public and private debt levels, pressing fiscal deficits and persistent internal and external trade imbalances. One explanation for why Europe39。Crisis, Contagion and Bailouts: What39。s Next for the European Union? European financial officials finally got out in front of swiftmoving market developments on May 10th by launching a huge $960 billion (750 billion euro) financial stabilization plan exceeding most expectations to bail out Greece and ensure the viability of the European Moary Union, at least for now. Some observers say the move prevented a potential financial meltdown in which concerns over sovereign debt defaults would have swiftly led to largescale bank runs in some European experts this week expected the package to continue to calm markets at least temporarily by guaranteeing most sovereign (and some private) debt in by providing credit for other troubled member economies in the future, including Portugal, Spain and Ireland. The bailout which also includes some bilateral loan agreements, . funds and dollar swap agreements through the Federal Reserve had the immediate effect of sweeping away fears of a possible collapse of the Eurozone39。s financial authorities did not act sooner to avert potential disaster: The leading player in any stabilization measure is Germany, because of the size and strength of its economy. But Germany was caught up in regional elections in NorthRhine Westphalia that were critical to the future of Angela Merkel, the German chancellor, and her coalition. Merkel appeared to want to delay any action on the European financial crisis until after elections because much of the German electorate takes a dim view on bailouts for countries thought to have overborrowed and overspent. The elections, held this past weekend as the bailout measures were being worked out, resulted in a serious defeat for Merkel39。t think about situations in which maybe the adoption of a mon currency would [create] stress and, in particular, the fact that even though there is a mon currency in the center of Europe there are no mechanisms in place really to make sure that all the countries are playing by the same rules and that all the countries are essentially plying with some basic criteria, which are half economic and half political. So this is not just about economics. It is also about politics criteria having to do with budget deficits and having to do with the way in which you are making sure your country can remain petitive after you have essentially given away a very important policy option in your toolkit, which is to devalue your currency. In other words, you are surrendering your sovereignty in terms of your currency, which means that when you are in hard times, you cannot devalue in order to bee more petitive. But at the same time, the architects of this moary union 10 years ago didn39。t think about what kinds of institutional arrangement and decisionmaking procedure should be in place to tackle a crisis that unfortunately as always happens with these sovereign debt crises has built up over a very, very long period of time. But [the crises] unfold very quickly. So the roots of the situation are to be found in the last five years or 10 years and probably the last 15 years, since Greece, Portugal, Spain and so on became members of the European Union in the mid 1980s. But the unfolding of the crisis actually has taken place over just a period of two months or three months and, therefore, if you didn39。s time to create the right institutions and mechanisms for dealing with the kinds of financial crises seen in Europe last week. Will we see more crises? I think that in a global economic will see more crises. That39。s been the lesson from the global financial crisis. I think that39。t let [the EU] fail. It39。n: As you know, this is a very controversial issue. That used to be the way in which the IMF [International Moary Fund] tended to operate, especially in the beginning of the 1980s. When a country knocked on the door saying, “We can39。s not just about economics. We can try to figure out what is the best technique of solution. We have great economists here at Wharton who could tell us the best solution from a technical point of view. But Saikat just mentioned that you also need to take into consideration what is possible politically possible and then what are going to be the consequences of this looking down the road, depending on how you proceed now. That39。t. Greece needs to avoid the situation in which they don3